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#2150916 - 10/24/17 01:11 PM Mobile Home on site but not loan collateral
JC Offline
100 Club
Joined: Jan 2014
Posts: 147
Oklahoma
We have a client who is applying for a Home Equity loan on their home. They own the home which sits on 25 acres. On the 25 acres is a mobile home in which someone does live. The bank is requiring flood for the mobile home. The bank is not taking the mobile home for collateral. I believe that flood is required. Does anyone disagree?

additional information: The mobile home is valued at $4000 and the deductible is $1000.

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Flood Compliance
#2150928 - 10/24/17 01:46 PM Re: Mobile Home on site but not loan collateral JC
Dan Persfull Offline
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Dan Persfull
Joined: Aug 2002
Posts: 47,517
Bloomington, IN
The bank is not taking the mobile home for collateral.

If the bank has no security interest in the mobile home then flood insurance would not be required on the mobile home.
_________________________
The opinions expressed are mine and they are not to be taken as legal advice.

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#2150935 - 10/24/17 02:20 PM Re: Mobile Home on site but not loan collateral JC
JC Offline
100 Club
Joined: Jan 2014
Posts: 147
Oklahoma
Thanks Dan, is this not considered a structure and part of the property?

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#2150939 - 10/24/17 02:31 PM Re: Mobile Home on site but not loan collateral JC
Adam F Offline
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Adam F
Joined: Apr 2013
Posts: 420
VA
I'm not Dan , but if the mobile home is titled and your are not holding the title as collateral, then the mobile home is not securing your loan.

(c) Requirement to purchase flood insurance where available—(1) In general. A member bank shall not make, increase, extend, or renew any designated loan unless the building or mobile home and any personal property securing the loan is covered by flood insurance for the term of the loan. The amount of insurance must be at least equal to the lesser of the outstanding principal balance of the designated loan or the maximum limit of coverage available for the particular type of property under the Act. Flood insurance coverage under the Act is limited to the building or mobile home and any personal property that secures a loan and not the land itself.
_________________________
It is better to act cautiously beforehand than to suffer afterward.

The answers I give are my opinions. Not legal advice.

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#2150942 - 10/24/17 02:45 PM Re: Mobile Home on site but not loan collateral JC
Dan Persfull Offline
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Dan Persfull
Joined: Aug 2002
Posts: 47,517
Bloomington, IN
is this not considered a structure and part of the property

I don't know, is it? You'll have to make that determination based on your loan documentation. Since you specifically stated the MH was not taken as security I assumed the MH was titled property and the title was not taken as security.

If the title to the MH has been surrendered then it has become a part of the real property and it would secure your loan via the "improvement clause" in the your mortgage.

So, do you or do you not have a security interest in the MH? That will determine if you need flood insurance or not.
_________________________
The opinions expressed are mine and they are not to be taken as legal advice.

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#2150943 - 10/24/17 02:51 PM Re: Mobile Home on site but not loan collateral JC
JC Offline
100 Club
Joined: Jan 2014
Posts: 147
Oklahoma
Thank you all very much for your responses. In this case, the title has not been surrendered and is not securing the loan, it is however, anchored on the property.

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